May 2024

Watch Series III M&A Deconstructed Now

Our latest M&A Deconstructed videos with solicitors Steele Raymond are now live, you can watch Series III below.

This series themes are:

1. Pre-Sale Due Diligence in M&A transactions
2. Property in M&A transactions
3. Current Trends in M&A Warranties and Indemnities
4. Looking to Sell Your Business – Where to Start

In Series III you will meet:
Nick Davies, Partner | M&A Solicitor, Steele Raymond
Jo Hammersley, Senior Associate Solicitor | Commercial Property, Steele Raymond
Shaun Guppy, Partner | M&A Solicitor, Steele Raymond

In this video Justin Levine and Shaun Guppy discuss pre-sale due diligence and the importance and relevance for a seller. Moreover why, when not an actual requirement, the investment of time and money is recommended before going to market, as well as how conducting thorough pre-sale due diligence upfront to identify and address any potential issues can actually save time, money, and prevent deal-breaking issues from arising during the sale process. They identify some common issues that can arise including; problems with the share register, ownership of intellectual property and compliance with data protection regulations. Actual due diligence can be a lengthy process and it involves three teams; legal, financial and tax, who examine the company in minute detail. Sellers often underestimate the time and effort required for due diligence but also how much more difficult and time consuming it is to rectify any issues mid-deal plus the potential exposure to an aborted sale, should skeleton(s) be found in the process causing a buyer to pull out.

In this conversation, Justin Levine and Johanna Hammersley discuss the topic of selling property owned by a company when part of an M&A process. They explore whether it is typical for property to be sold with the company and the issues that can arise in such situations. Justin notes that many clients want to sell both the company and the property, but not all buyers are interested in acquiring the property. Jo adds that there are also cases where sellers want to retain the property for their own purposes. They discuss the complexities of structuring deals involving the sale of property and the potential tax implications. They also touch on issues such as occupational leases, raising debt on the target property, dilapidations, and environmental concerns. Overall, they emphasise the importance of thorough pre-sale due diligence and clear communication between all parties involved in the transaction.

In this video, Justin Levine and Nick Davies discuss the current trends of warranties and indemnities in the context of M&A transactions. They explain that warranties are statements of fact given by a seller to a buyer to provide reassurance about certain matters affecting the company being sold. These warranties are typically found in the share sale and purchase agreement (SPA) and are heavily negotiated. They can also be given as representations, which provide the buyer with additional remedies if the warranty is untrue or misleading. Indemnities, on the other hand, are specific obligations to compensate the buyer for identified risks, such as tax claims or issues. The amount of compensation is typically a pound-for-pound adjustment to the price. The speakers emphasise the importance of sellers conducting pre-sale due diligence and addressing any issues upfront to mitigate the need for warranties and indemnities. They also discuss the limited occurrence of warranty claims and the potential use of warranty and indemnity insurance. Overall, they stress the need for sellers to have a knowledgeable legal team and to consider investing in pre-due diligence to ensure a smooth transaction and minimise risks.

In this video, Nick Davies and Justin Levine discuss the process of selling a company and provide guidance on who to approach and what to expect. They explain that the first step is to educate oneself on the sales process, as most business owners have not sold a company before. They also emphasise the importance of understanding the size of the business, as this will determine the type of support needed. For smaller businesses with profits below £1 million, business brokers are typically the route to market. For larger businesses, M&A firms, corporate finance firms, and investment banks are more suitable options. The video also touches on the importance of valuation and how it is determined through a range of factors, including profit and market data. The process of selling a company can take around 12 months, with due diligence and negotiation being key stages. The video concludes by highlighting the value of having a skilled professionals including solicitors and M&A firm to guide the process and increase the chances of a successful sale.

These videos form part of a series of short videos aiming to demystify M&A by explaining aspects of the company sale process.

If you missed the previous 12 video releases, you can catch Series I & II on our video page or contact us here to discus your company sale in confidence.

Tags: company sale, DD, due diligence, EBITDA, indemnities, Jo Hammersely, M&A, M&A Deconstructed, mergers and acquisitions, Nick Davies, Pre-Sale Due Diligence, Property, Sell Your Business, Shaun Guppy, Steele Raymond, TheNonExec, W&I, warranties, Warranties & Indemnities